Freight Rail, Safety, Standards & Regulation

ACCC leaves investors wanting more from Asciano

Coal train. Photo: ARTC

Investors want Asciano to provide an alternative plan in case Brookfield’s proposed takeover is blocked by the government’s competition watchdog.

A Fairfax report on Monday suggests the ASX-listed owner of rail giant Pacific National is being urged by major shareholders to prepare for the Australian Competition and Consumer Commission to object to Brookfield’s $8.9 billion takeover offer.

Asciano’s share price took a turn last week after the ACCC opted to delay its decision on the takeover offer until December.

ACCC boss Rod Sims said the authority was concerned Brookfield’s existing interests in Queensland and Western Australia would conflict with an acquisition of Pacific National.

Now Asciano boss Malcolm Broomhead is reportedly being asked to provide an alternative strategy for the company, should the massive takeover move not go ahead.


Related story: Concerned ACCC delays Asciano decision


“We’d like to get his perspective on how things will progress from here and what the options are either way – whether the transaction can be progressed, and if it doesn’t, to discuss how Asciano can continue to focus on executing well,” UBS Global Asset Management head of Australian Equities Jakov Males was quoted by Fairfax.

UBS owns roughly 7.6% of Asciano. At $9.15 a share UBS stands to earn $678 million in cash and shares if the takeover goes through.

The ACCC announcement sent Asciano’s share price down 86 cents last week, to a Friday close of $7.60 a share.

The competition authority says Brookfield’s existing WA rail business – Brookfield Rail – could create an unwanted level of vertical integration if Brookfield acquired ownership of Pacific National.

The ACCC has the same concerns over Brookfield’s ownership of Dalrymple Bay Coal Terminal in Queensland.

“We understand [the ACCC’s] comments about vertical integration because there is an element of it in the deal,” Males was quoted as saying.

“But in terms of their concerns over a lessening of competition, which is their key mandate, we don’t really see it.”